Department for Communities and Local Government: Housing Market Renewal

“Housing market renewal is a radical programme but it is a high risk approach. While there have been physical improvements in some neighbourhoods, it is unclear whether intervention itself has led to improvement in the problems of low demand. And in some cases intervention has exacerbated problems in the short-term.

“The Department for Communities and Local Government needs to make sure that pathfinders not only delivers its regional development plans, but also complements the broader regeneration of areas contributing to better schools and transport links.”

“Housing market renewal is a radical programme but it is a high risk approach. While there have been physical improvements in some neighbourhoods, it is unclear whether intervention itself has led to improvement in the problems of low demand. And in some cases intervention has exacerbated problems in the short-term.
“The Department for Communities and Local Government needs to make sure that pathfinders not only delivers its regional development plans, but also complements the broader regeneration of areas contributing to better schools and transport links.”

Sir John Bourn, head of the National Audit Office, 9 November 2007

The pathfinders housing market renewal programme has been running for five years and the government has commited £2.2 billion to it up to 2011. Low demand for housing is now less severe in pathfinder areas and the gap between these areas and surrounding regions has started to close. However, it is not possible to identify a causal link between pathfinder activity and these changes in housing markets, as there are many other factors involved. While it has improved conditions for some neighbourhoods, for others it has led to heightened stress in the short term.

As part of the government’s radical approach to addressing the problems of neighbourhoods which have suffered long-standing deprivation, the pathfinders programme was introduced in nine areas in the Midlands and the North of England.

Under the programme, 40,000 homes have been refurbished and 1,100 new homes built. Some 10,200 properties have also been demolished. In a number of areas there has been opposition to demolition projects, and the original plans to demolish 90,000 properties have been reduced to 57,100 in response to pathfinders’ greater knowledge of local housing markets and its focus on more targeted geographical areas, as well as rising property costs and in recognition of the heritage attached to some of the properties originally due for demolition.

One key goal of the pathfinders programme is to close the gap in vacancy rates and in house prices with wider regional performance. Although on the whole the gap has narrowed, progress has been mixed across the nine areas. Housing markets have performed better in pathfinder local authorities than in those authorities with the most similar level of low demand problems to the pathfinders areas. In some areas there is a risk that plans to build homes in the wider regions could threaten pathfinder efforts to restructure housing markets in their own areas.

The management of the programme has also led to problems. The need to make early progress meant that, in the first tranche of £500 million, a number of schemes were set in hand before pathfinders put in place their regeneration master plans, community engagement strategies and heritage assessments.

Pathfinder interventions have, in some cases, exacerbated low demand problems in the short-term as houses have been vacated in advance of demolition or refurbishment. In some areas speculative purchases have added to the already transient nature of the communities and led to estimated additional costs of £50 million in implementing the programme.

The NAO found that more could be done to strengthen the assessment of performance and value for money achieved by engaging more actively with each pathfinder to identify and disseminate best practice. The Department needs to clarify arrangements for the delivery of the Housing Market Renewal programme for the future. It must be clearer about the programme’s contribution to non-housing regeneration, such as better schools and transport links, which also help to improve housing markets.

All the pathfinders claim majority support for their proposals. The NAO found that, in some cases, particularly where demolition is proposed, the way the programme is implemented is crucial in gaining community trust and support. The NAO report contains recommendations to ensure communities fully understand proposals and community support is monitored at all stages as plans develop. Proposals for intervention should be based on detailed assessments of the structural condition and heritage value of the housing targeted for demolition and the residents’ own views of the problems they face.